24 States Sue Over Student Loan Caps on Nursing and Healthcare Degrees
A coalition of 24 states and the District of Columbia filed a federal lawsuit Tuesday challenging a U.S. Department of Education rule that limits federal student loan access for graduate students pursuing nursing, physical therapy, and other healthcare-related degrees. The lawsuit, filed in the U.S. District Court for the District of Maryland, argues the restrictions unlawfully exceed congressional authority and threaten to worsen healthcare workforce shortages across the country.
Background of the Rule
The dispute stems from the One Big Beautiful Bill Act, signed into law by President Trump in July 2025, which overhauled the federal student loan system. The law eliminated the Grad PLUS program and imposed new borrowing caps: graduate students can now borrow up to $20,500 annually with a $100,000 aggregate limit, while students in designated professional degree programs can borrow up to $50,000 annually with a $200,000 aggregate limit.
However, the Education Department’s implementing rule narrowed the definition of “professional degree” to just 11 categories: chiropractic, clinical psychology, dentistry, law, medicine, optometry, osteopathic medicine, pharmacy, podiatry, theology, and veterinary medicine. Excluded from this list are nursing (at all graduate levels), physical therapy, occupational therapy, nurse anesthesia, physician assistant programs, public health, social work, and audiology.
According to NPR, the plaintiffs argue that the department’s list of professional degree examples “was taken from a regulation that had not been changed since the 1950s, a time when graduate programs in nursing and other healthcare professions barely existed.”
The Legal Challenge
The lawsuit, co-led by Maryland Attorney General Anthony Brown and New York Attorney General Letitia James, alleges that the Education Department unlawfully altered the federal definition of “professional degree” by adding requirements Congress never authorized. The governors of Kentucky and Pennsylvania have also joined the suit.
“This unlawful rule doesn’t just limit loans for graduate students: it limits students’ futures,” Brown said in a statement reported by Fox Baltimore. “By capping loan amounts, the Trump Administration will force Marylanders who want to be nurses, physician assistants, or physical therapists to decide between taking on more expensive private loans, or walking away from their chosen career.”
New York Attorney General Letitia James echoed the concern: “Higher education is expensive, and our health care system is already under immense strain. This rule will shut talented people out of critical professions and leave communities with fewer health care providers they desperately need.”
The rule is scheduled to take effect on July 1, 2026. Existing students are partially grandfathered, but those who transfer or temporarily withdraw may lose eligibility.
Impact on the Healthcare Workforce
The American Nurses Association (ANA) has been a vocal opponent of the rule. In a statement, ANA President Jennifer Mensik Kennedy warned that the restrictions would be felt most acutely in underserved areas.
“Make no mistake, this is not a technicality or a footnote,” Kennedy said, as reported by NPR. “This rule will be felt in real communities, for example, in rural areas where nurse practitioners, midwives, and nurse anesthesiologists are often the only providers of core care services.”
The American Nurses Association noted that over 245,000 nurses and nurse advocates signed a petition opposing the rule. The American Association of Colleges of Nursing warned that nursing students “could be forced to seek high-interest private loans or abandon advanced practice education.”
Bipartisan Concerns
The rule has drawn criticism from both sides of the aisle. During a House Education and Workforce Committee hearing on May 14, Republican Rep. Randy Fine of Florida questioned Education Secretary Linda McMahon about the potential impact on workforce shortages.
“Does it make sense for us to take a field where we have real shortages and create a situation where we may not be able to create the [healthcare workers] we need, where we already don’t have enough?” Fine asked, according to NPR.
Rep. Lisa McClain (R-MI), chair of the House Republican Conference, suggested the exclusion of nursing may have been an “unintended consequence” that “got overlooked,” as reported by the CT Mirror.
The Administration’s Defense
Secretary McMahon has defended the rule on two fronts. First, she argues that the caps will force colleges to lower tuition prices. “It is our overall goal to bring down the cost of college and education,” McMahon said during the hearing. “And I do think that, relative to the shortages we’re having, if we can bring down the cost for nurses in schools, we can get more students to apply.”
Second, administration officials point to data suggesting limited impact. McMahon claimed that 95% of nursing programs and 78% of graduate nursing students fall within the new caps. Preston Cooper of the American Enterprise Institute echoed this view, writing that “the new caps will affect only a small number of programs charging exorbitant prices.”
However, nursing organizations dispute these figures. The American Association of Colleges of Nursing notes that some programs, such as entry-level Master of Science in Nursing degrees, can cost $77,155 per year — nearly four times the $20,500 annual cap.
What’s Next
Multiple bipartisan bills have been introduced in Congress to address the issue, including legislation to expand the professional degree definition and a Congressional Review Act resolution to overturn the regulation entirely. The states may also seek an emergency injunction to block the rule before the July 1 effective date while litigation proceeds.
The Education Department maintains that the rule will save taxpayers $409 billion and protect students from excessive debt. The outcome of the legal challenge will determine whether the new limits stand or whether Congress will need to step in with a legislative fix.